Early market roundup: Tepid start for UK equities; oil lifts FTSE 100

London FTSE 100 edged slightly higher on Tuesday morning, supported by share price rises for its larger constituents, but trade largely lacked a spark and European peers were in the red.

The FTSE 100 index opened up 7.21 points, 0.1%, at 10,727.51. Oil majors and international earners supported the index, as Brent surged and the pound lost ground. HSBC, Shell and AstraZeneca, the largest index constituents, rose 0.2%, 1.5% and 0.3%.

The FTSE 250 fell 37.28 points, 0.2%, at 24,667.12. The AIM all-share was down 2.36 points, 0.3%, at 798.39.

The Cboe UK 100 was up 0.1% at 1,066.87, the Cboe UK 250 was 0.1% lower at 21,448.82, and the Cboe small companies was down 0.2% at 19,050.09.

In European equities on Tuesday, the CAC 40 in Paris was down 0.2%, and the DAX 40 in Frankfurt 0.3% lower.

Sterling fell to USD1.3526 on Tuesday morning, from USD1.3557 at the time of the London equities close on Monday. Versus the euro, it fell to EUR1.1681 from EUR1.1702.

The UK unemployment rate was steady at the end of the second quarter, underperforming expectations of a decrease, but a measure of pay growth was hotter than forecast.

The Office for National Statistics said the UK unemployment rate was 4.9% in the three months to June, unchanged from the three months to May. However, it had been expected to ease to 4.8%, according to consensus cited by FXStreet.

The jobless rate is up from 4.7% a year prior.

"Estimates for payrolled employees in the UK fell by 78,000 between June 2025 and June 2026," the ONS said. "However, it was largely unchanged on the month, decreasing by 13,000 between May and June 2026."

The ONS said an early estimate showed payrolled employees for July was 94,000 lower on-year and down 13,000 on-month to 30.3 million.

Year-on-year growth in average earnings was 3.5% in April to June, when excluding bonuses. Including bonuses, it was 4.1% higher. The figure excluding bonuses topped the FXStreet cited consensus of 3.4%, while the total pay figure was in line with the market forecast.

In the three months to May, total pay growth was 4.4%, while regular pay growth, which strips out bonuses, was 3.4%.

Analysts at ING commented: "Ongoing weakness in private-sector hiring and wage growth suggests the bar is still relatively high for a rate hike in 2026, barring a severe and prolonged spike in energy prices. We expect the Bank of England to remain on hold this year and resume rate cuts from spring 2027."

The euro traded at USD1.1574 on Tuesday, fading from USD1.1586 late Monday. Against the yen, the dollar picked up to JPY159.72 from JPY159.34.

The yield on the 10-year US Treasury widened to 4.74% on Tuesday morning from 4.71% late Monday afternoon. The 30-year yield stretched to 5.32% from 5.29%.

Gold fell to USD4,403.07 an ounce from USD4,423.12. A barrel of Brent surged to USD91.18 from USD89.07.

President Donald Trump threatened Monday to bomb Oman if it "gets in the way" of a US deal with Iran on the Strait of Hormuz and called for Tehran to surrender in a war that has become a growing political burden.

Control of the waterway, which Iran has effectively closed since the conflict began on February 28, remains at the heart of the deadlock between Tehran and Washington.

With whipsawing fuel prices and public opposition to the war weighing on Republicans ahead of November's midterm elections, Trump has faced mounting pressure to end a stalemate that has dragged on for nearly six months.

"If Oman gets in the way, we'll bomb the shit out of them," Trump told Fox News journalist Trey Yingst, referring to ongoing talks between Oman and Iran on control of the strait, which lies between the two countries.

In Tokyo on Tuesday, the Nikkei 225 shed 2.5%. In China, the Shanghai Composite rose 0.2%, while the Hang Seng Index in Hong Kong edged up 0.1%. Sydney's S&P/ASX 200 closed slightly lower.

In London, Kainos shares jumped 19%. It raised its revenue and earnings guidance, as it said sales momentum from financial 2026 has continued into the new financial year.

London-based Kainos provides IT support to customers across three divisions: Digital Services, Workday Services, and Workday Products.

It said the double-digit percentage revenue growth and record order backlog that it achieved in the financial year that ended March 31 has continued into financial 2027. As a result, it said its annual results will be "comfortably ahead" of current market expectations.

Kainos cited these as adjusted pretax profit of £75.0 million to £84.0 million on revenue of £498.0 million to £514.0 million. This would be up from £67.1 million and £431.1 million in financial 2026.

Time Out Group added 9.6%. The media and hospitality business expects total revenue of £72 million for the year ended June 30, just below £73 million a year prior. But from continuing operations, a rise of 11% to £61 million from £55 million is expected.

Time Out noted its Media arm has returned to adjusted earnings before interest, tax, depreciation and amortisation profit. Its Markets arm opened three new sites during the year, Budapest, New York Union Square and Vancouver.

"At 30 June 2026, five additional Markets were in development-Abu Dhabi, New Delhi, São Paulo, Prague and Riyadh. New Delhi and Sao Paulo are the first agreements under the Group's new capital-light Market franchise model, creating the potential for further locations in India and South America," Time Out said. "Following the year end, the Group secured a flagship London Market at Piccadilly Circus, bringing the concept to the city where Time Out was founded and increasing the development pipeline to six locations."

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